Welcome to MONEY MASTER. Money Master is a financial management and money talk blog where our aim is to become the money master rather than the slave to the money. Making money is no easy job if you treat it as a burden but once money becomes your friend and work for you, that is when cash flows in. Becoming the money master rather than slave to it helps us redefine the whole idea of earning more - it's more like the money working for us.

Saturday, November 7, 2009

What does the 1Malaysia 2010 Budget has in store for you? - Part 2

The last post on 2010 Malaysia Budget is regarding on how the government will implement the fuel subsidy which in my opinion, will not be able to reduce the burden of the poor, which was the actual purpose of the subsidy.

This time, I will discuss the other "goodies" in 2010 Malaysia Budget like the following:-

The maximum income tax rate for individuals to be reduced to 26% from assessment year 2010. Personal relief increased to RM9,000.

Personal relief for EPF and life insurance schemes to be increased to RM7,000.

Taxpayers will get tax relief on broadband subscription fee of up to RM500 from 2010 to 2012.

To promote prudent spending, a service charge of RM50 a year to be imposed on each principal credit card and charge card; and RM25 a year on each supplementary card, effective from Jan 1, 2010.

The personal relief will be increased to RM9,000 where almost everyone will be benefited from this. This is actually a RM1,000 or 12.5% increase from the previous RM8,000. The maximum income tax rate for individuals will be reduced to 26%. Only those with getting salary Rm10,000 above monthly will be in this tax bracket, so most people will not be able to enjoy this "goodie".

I do agree that relief for EPF and life insurance scheme to be increase, in this case, a RM1,000 increase. So, a relief for this portion is always welcome, but RM1,000 increase is still not much, our government can still do better than this.

Government introducing the broadband relief of RM500, translate to about RM40 per month, where one cannot even subscribe to the cheapest TMNet Streamyx Combo Package of 384/128 which cost RM60 per month. This mean that to entitle to this "goodie" everyone must top up additional RM20 per month.

Finally, the credit card tax of RM50 per card. This one I found most ridiculous of all. How can taxing on each credit card will promote prudent spending? IF it is for prudent spending, why not tax only for after the 2nd or 3rd credit/charge cards? Those with problem managing finance previously and fill with debt will have extra burden.

Besides that, with this tax, some of us will eventually cut all the credit/charge cards since most of the time, these cards serve as emergency usage only. Without credit, how the citizen will spend or dare to spend? Even if we were to spend using cash, it will be limited to monthly salary. Credit cards have the easy payment facility for one to purchase expensive stuff like furniture, electronic devices, appliances and many more paying certain installment for a duration of time. With this easy payment, one will not have to uplift his or her current FD to pay for the expensive stuff especially for certain event like moving to new house.

Another point to ponder, with crime like snatch theft and robbery happening daily, who dare to go outdoor with full of cash? If this is limited, who will spend? Without spending, how the government going to stimulate the country's economy?

The 2010 Malaysia Budget consists of "goodies" which looks like the government is planning to reduce the burden of the people, but at the same time taxing the people more. It is like one step forward, two step backward. How can taxing for credit card promoting prudent spending? Why the people have to be tax just to promote prudent spending, while government official buying laptop at a price at least 10 times more expensive? Why not the government promote prudent spending by cutting the budget required for each project instead of taxing the people, their boss?

If the 2010 Malaysia Budget theme is to realized, government and the people should work together in prospering the nation. Remember the theme is 1Malaysia, Together We Prosper. 1Malaysia means everyone of us working together prospering together.